Europeans get another one: quintessence to Benckiser

Drug Store News, June 24, 1991

Europeans get another one: Quintessence to Benckiser

CHICAGO - European companies have begun to invest in American beauty care businesses, raising such questions as how serious they are about beauty care and what they're willing to invest to build mass market business.

At press time, the German company Joh. A. Benckiser GmbH was in the process of completing its acquisition of the $100 million Quintessence Holdings, based here.

Reports were circulating that three of Quintessence's top executives will soon leave the company: chairman Barry Shipp; president Joseph Aramanda, and senior vp-corporate sales John Small.

Victor Zast, formerly senior corporate vp-marketing, will become vp-marketing, and Sean Greene, former vp and general sales manager-Jovan, will become vp-sales, speculate sources familiar with the company. They also say that Mort May will remain as vp-finance. All three men will probably report to Dr. Thomas Bonoma, Ph.D., who is president of Benckiser's Consumer Products Division in Greenwich, Conn.

Benckiser has been artfully described as the P&G of Germany, and its acquisition of Quintessence in some ways resembles P&G's recent acquisitions here, most recently Max Factor, which has a strong presence in overseas markets, and its earlier takeover of Noxell, parent of Cover Girl, Clarion and Navy.

The overriding question is will Benckiser do for Quintessence what P&G has been doing for Cover Girl: give it the corporate support to stand out in its categories.

Or will it do what Unilever has been doing to Prince Matchabelli recently: cut back on advertising mass brands in order to spend more heavily on department store brands.

A source for Benckiser said it is still "too soon to talk about plans and future strategies, including any possible moves or management changes."

However, Allan Mottus, an industry consultant, points out that European companies have a strong history of investing in their brands.

Besides Unilever's investments in its department store brands, he notes L'Oreal's huge investments in skin care; Beiersdorf's investments in skin and sun; Colonia's investments in its department store lines and growing interest in mass market brands; the Japanese conglomerate KAO Corp's commitment to Jergens; and, most recently, Tsumura International's investments in its American brands in mass and department stores, including the Sante Fe and Pierre Cardin fragrances just acquired from P&G.

Benckiser does seem to have what one source familiar with the company called "deep pockets."

Benckiser owns many No. 1 brands - following steady and aggressive acquisitions.

Although Benckiser has not released its purchase price for Quintessence, the transaction was reportedly made without the help of investment bankers, suggesting that the $2.2 billion conglomerate with 70 subsidiaries in 30 countries does have the cash it takes to investment spend.

Benckiser seems to be serious about wanting to become a worldwide force in the cosmetics/ fragrances category. Although Benckiser, like P&G, is primarily known as a household products company, Mottus says its cosmetics and fragrance brands do well overseas. "They own the cosmetics market in Germany, and are strong in Spain, Italy and South America. Joop! is one of the hottest brands in Germany right now," he said.

"And remember, the United States represents about one-third of the worldwide market in cosmetics, so a company has to have a very strong U.S. presence or they won't be as strong worldwide as they could be."

Just prior to the Quintessence acquisition, Benckiser also acquired two of Revlon's prestige cosmetic lines, Lancaster and Germaine Monteil, both of which were also once owned by Beecham.

Overseas stores

Benckiser also owns designer fragrances sold in department stores overseas: Joop!, Jil Sander, Davidoff and Paco Rabanne.

One high level executive at L'Oreal, the French-owned cosmetics giant, also makes the point that Europeans take the long-term view of building their businesses, as opposed to the American short-term outlook.